Enforcement of Money Judgments - The Tribunals, Courts and Enforcement Act 2007
As some businesses experience cash flow problems caused by the credit crunch, many seem to be prepared to be more robust in pursuing debtors through the courts. However, successfully obtaining a judgment in your favour can sometimes only be part of the solution. If a judgment debtor fails to pay a judgment debt when ordered to do so, the judgment creditor will have to enforce the judgment if it wants to receive payment.
The Tribunals, Courts and Enforcement Act 2007 will have a significant effect on the way judgment debts are enforced in the future. The Act contains a wide range of provisions, including measures covering the regulation of bailiffs and enforcement of civil court judgments. The Act received Royal Assent on 19 July 2007, however, the enforcement law reforms contained within Schedule 12 of the Act will require Parliament to pass underpinning rules and regulations to give them effect. Some of the key changes brought about by the Act are outlined below.
Execution
One of the most commonly used methods of enforcement is instructing the county court bailiff or the High Court Enforcement Officer to seize and sell the debtor’s goods to pay the judgment debt. This is known as execution.
Under the Act, only authorised agents with the appropriate certification will be allowed to enforce. The term enforcement agents will replace the current titles of bailiff and High Court Enforcement Officer.
The Act extends the enforcement agent’s powers of entry but this is subject to the requirement that a warning notice has to be served on the judgment debtor first. One of the advantages of the current system is the element of surprise. Notice of execution will no doubt lead to the debtor removing valuable items from the premises prior to the enforcement agent’s appointment date.
Charging Orders
Where a court has ordered a judgment debtor to pay a sum of money, a judgment creditor may secure payment of that money by obtaining a charging order over the debtor’s property. Once an order is in place, the creditor can apply to the court for an order for sale of the charged property.
At present, where the court has made an order for payment of the sum due by instalments, a charging order cannot be obtained as long as the debtor is up to date with the instalment payments. This allows a debtor who is meeting his regular instalments, to sell the property without being required to settle the debt in full from the proceeds of sale. The creditor can apply to the court for a variation in the date or rate of payment but that involves both time and expense, and there is no guarantee the outcome sought will be achieved.
The Act allows a judgment creditor to obtain a charging order where the judgment debt is payable by instalments, even where the instalments are not in arrears. However, the Act allows for financial thresholds that prevent orders for sale being obtained to satisfy relatively small judgment debts. At present it is not known what those financial limits will be. It is hoped they will not be so high that they deny a significant number of judgment creditors access to an important method of enforcement.
Attachment of Earnings Order
One of the benefits for the judgment creditor under the Act is the proposed system to allow attachment of earnings orders to follow the judgment debtor if he/she changes employment. At present this is very difficult. Under the Act it is intended that Her Majesty’s Revenue and Customs will provide the necessary information to the courts to allow the attachment of earnings order to be redirected.
Author: Christopher Davies
Published: 01 January 1970